West Midlands-based employers cannot afford to ignore diversity if they are to keep ahead of the competition and avoid costly mistakes.

Speaking at a flagship HR conference in Birmingham next month, law firm Hammonds will highlight the benefits and how to achieve them.

"As the most ethnically diverse English region outside of London – with Birmingham rapidly moving towards becoming the first ethnic majority city – local employers should be leading the way when it comes to developing policies to attract and retain the best people from all backgrounds," said Teresa Dolan, an employment partner at Hammonds.

"Employers should start developing an effective, long-term approach to this issue so that their businesses gain a competitive edge."

Certain sections of the region's employers have been quick to diversify their workforce, mainly due to a need to address UK skills shortages.

However, not all have adapted their policies and working practices and the result has been a continued growth in the number of discrimination claims brought by workers.

According to Ms Dolan the benefits of a well-designed diversity policy are varied. "As well as improved communication and managerial styles, staff retention levels often increase whilst absence levels decrease. An inclusive culture which welcomes individual differences is also a great marketing tool and often helps companies to become employers of choice.

"On top of this there are clear financial benefits to introducing a successful diversity policy. According to the 2006-7 tribunal statistics, the average award for a successful race discrimination claim was £14,000, with £10,000 being the average in sex discrimination cases. An effective policy can therefore help employers to minimise or avoid these financial risks and improve their bottom line."

Ms Dolan added: "There is no doubt that diversity poses a number of practical challenges for employers. The key is to look beyond these challenges in order to gain a true competitive advantage."

Hammonds' employment team is co-sponsoring this year's CIPD Midlands Conference, which takes place on June 10 at the ICC in Birmingham.